Appeal admitted despite filing delay, purchases disallowed, gross profit rate under scrutiny.

The appeal was admitted despite a 22-day filing delay, which was condoned. The Assessing Officer disallowed 25% of purchases, upheld by CIT(A) but reduced. ITAT found no justification for rejecting accounts due to unverified purchases. CIT(A) rejected accounts under section 145(3), but ITAT disagreed. CIT(A) estimated gross profit at 25%, higher than declared, based on past history. ITAT remanded the case to determine a finalized past years' gross profit rate. The appeal was allowed for statistical purposes, with a remand for determining the gross profit rate based on finalized past years' results.

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Issues:
1. Delay in filing the appeal
2. Addition of gross profit by the Assessing Officer
3. Rejection of books of accounts by invoking provisions of section 145(3)
4. Estimation of gross profit rate by the CIT(A)

Delay in filing the appeal:
The appeal was admitted for adjudication despite a delay of 22 days in filing it, which was condoned after considering the affidavit filed by the assessee.

Addition of gross profit by the Assessing Officer:
The Assessing Officer disallowed 25% of certain purchases made by the assessee, resulting in a trading addition. The CIT(A) upheld this decision but restricted the addition to a lower amount. The ITAT considered the submissions and material on record, noting that the rejection of books of account by the AO was not justified, as there was no defect found in maintaining the books. The ITAT also highlighted that payments were made through proper banking channels, and rejection of books of account was not warranted solely based on unverified purchases.

Rejection of books of accounts by invoking provisions of section 145(3):
The CIT(A) upheld the rejection of books of accounts by invoking section 145(3) due to unverifiable purchases made by the assessee. However, the ITAT found that the rejection of books of account was not justified solely based on a few unverified purchases, especially when all other details were maintained correctly.

Estimation of gross profit rate by the CIT(A):
The CIT(A) estimated the gross profit rate at 25% on the total turnover, which was higher than the rate declared by the assessee. The ITAT noted that the past history of the assessee provided a reasonable basis for such estimation. However, as the past years' results were not finalized and comparable third-party data was absent, the ITAT remanded the case to the AO to determine the past years' gross profit rate that had attained finality and apply the average to the year under consideration.

In conclusion, the appeal of the assessee was allowed for statistical purposes, and the case was remanded to determine the gross profit rate based on finalized past years' results.

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